Good Governance Through Better Public Financial Management in Pakistan

As a citizen of Pakistan, you have a vested interest in how public funds are managed and spent. Effective public financial management is crucial for ensuring that government resources are utilized efficiently and transparently. When public funds are mismanaged or misappropriated, it undermines good governance and economic growth. Pakistan has faced significant challenges in reforming and strengthening its public financial management systems. However, improving budget formulation, execution, and oversight can help build a more prosperous nation. By understanding the importance of public financial management and advocating for continued progress in this area, you can play an active role in promoting better governance and a brighter future for Pakistan.

Establishing Effective Public Financial Management Systems

To establish effective public financial management (PFM) systems in Pakistan, several key steps must be taken:

1.     Strengthen legal frameworks. The legal framework governing public funds must be comprehensive, clear, and enforced. Laws on budgeting, accounting, auditing, and procurement should meet international standards.

2.     Improve budget planning and execution. The budget process should be transparent and participatory. Revenue and expenditure forecasts should be realistic. Funds should be released on schedule and spent for intended purposes. Monitoring systems are needed to track budget execution.

3.     Enhance transparency and accountability. The government should publish comprehensive budget documents, in-year reports, and audited financial statements. Independent audit institutions should have adequate funding and authority to report on public funds.

4.     Upgrade financial management information systems. Modern, integrated systems are required to process and track financial transactions, monitor budget execution, and produce timely reports. Staff must be properly trained to operate these systems.

5.     Build professional capacity. Staff involved in PFM require ongoing training and skills development to properly handle public funds in line with regulations and best practices. Recruitment should be based on merit, not patronage.

6.     Strengthen coordination. Effective PFM requires coordination across ministries, departments and levels of government. Formal mechanisms are needed to facilitate information sharing, resolve issues, and advance reforms.

By systematically addressing each of these areas, the Government of Pakistan can establish a sound PFM system to responsibly and accountably manage public resources for the benefit of citizens. With the support of professional firms, steady progress can be made toward good governance and fiscal discipline.

Planning and Budgeting: Adopting Multi-Year Budget Frameworks

To achieve effective governance and prudent management of public funds in Pakistan, adopting multi-year budget frameworks is essential. Multi-year budgeting helps align government policies, planning and resource allocation over the medium term.

·       It promotes fiscal discipline by setting hard budget constraints over several years. This helps avoid unrealistic projections and forces prioritization of expenditures.

·       It enhances the predictability of budget allocations which leads to improved planning and execution of projects and programs. Line ministries and departments can develop strategic plans knowing the level of resources available over the medium term.

·       It strengthens the link between policymaking, planning and budgeting. Policies and strategic plans can be translated into multi-year budget estimates to support their implementation. Similarly, budget ceilings can shape policy and planning priorities.

·       It allows smoothing of expenditures over years which can reduce volatility and enhance stability. This is particularly useful for development projects and capital investments that span over several years.

To reap these benefits, the Government of Pakistan needs to strengthen its medium-term budgetary framework by developing 3-year rolling budgets, improving coordination between planning and budgeting, and enhancing capacity for multi-year budgeting across ministries and departments. Multi-year budgeting, if implemented effectively, can significantly contribute to improved governance and management of public funds in Pakistan.

Improving Budget Execution and Monitoring

To improve budget execution and monitoring in Pakistan, several key steps should be taken:

Strengthen Commitment to Fiscal Discipline

The government must demonstrate a strong commitment to fiscal discipline by controlling spending within budgeted limits and raising adequate revenues. Strict cash management procedures should be enforced to avoid buildup of arrears. –

Improve Budget Planning and Preparation

The budget preparation process needs to be strengthened by developing robust and credible medium-term budget frameworks, improving costing of new policy initiatives and strengthening links between policy priorities, budget strategies and resource allocations. Ministries and departments should be provided clear budget ceilings to guide their budget proposals.

Enhance Budget Transparency

Budget transparency should be enhanced by improving classification of expenditures and revenues, disclosing fiscal risks from public corporations and local governments and publishing comprehensive budget documents. Citizens should be engaged in the budget process through public consultations.

Strengthen Audit and Oversight

The oversight role of parliament and audit institutions such as the Auditor General of Pakistan should be strengthened. Audit reports should be published and followed up to address identified issues. The Public Accounts Committee should review audit reports and hold public hearings to make the government accountable for budget execution.

Improve Cash and Debt Management

Cash and debt management should be strengthened through better forecasting of cash inflows and outflows, avoiding accumulation of arrears and developing an efficient debt management strategy. Borrowing should be limited to financing high-priority development projects and not used to finance recurrent expenditures.

By following these recommendations, the government of Pakistan can achieve improved budget execution, enhance transparency and strengthen oversight and accountability. Effective implementation of reforms in public financial management will contribute to good governance and more prudent management of public resources.

Accurate and Timely Financial Reporting

Accurate and timely financial reporting is crucial for good governance and effective public financial management. As an independent financial advisory firm in Pakistan, Usman Rasheed & Co Chartered Accountants emphasizes the importance of transparent and accountable financial reporting to our clients.

Timely Reporting

Financial reports should be issued promptly after the end of each fiscal year and quarter. Delayed reporting hampers decision making and reduces accountability. Timely reporting allows stakeholders to understand the financial position and performance of an organization, and to take corrective actions if needed.

Accurate Reporting

Financial reports should present information that is factually correct and free from material misstatements. Inaccurate reporting can mislead stakeholders and undermine good governance. Audits help ensure the accuracy and reliability of financial reports. Usman Rasheed & Co provides independent audit services to verify that financial statements are free from material misstatement.

Relevant and Complete Reporting

Financial reports should include all information relevant to stakeholders’ needs and a fair presentation of an organization’s financial position and performance. Reports should disclose all significant accounting policies and quantify financial impacts. Omitting significant information reduces transparency and accountability.


Financial reports should allow stakeholders to compare an organization’s current financial position and performance with previous periods. Comparability is achieved through consistent application of accounting standards and policies from period to period. Changes in policies should be disclosed along with quantification of their impacts.

To summarize, accurate, timely and complete financial reporting is fundamental to good governance and effective public financial management. Financial reports should present information that is factually correct, disclose all relevant details, and allow for comparison across periods. Independent audits help ensure the reliability of financial reports. Overall, transparent and accountable financial reporting builds trust in institutions and leads to better decision making and resource allocation.

External Scrutiny and Audit of Public Finances

As an external auditor in Pakistan, your role in scrutinizing and auditing public finances is crucial for good governance and accountability.

Independence and Objectivity

It is essential that external auditors remain independent and objective. You must avoid conflicts of interest and not be influenced by personal or political interests. Your duty is to serve the public interest.

Comprehensive Examination

You need to conduct a thorough examination of public accounts and finances. This includes reviewing financial records, transactions, systems and controls to determine if public money is being used legally and appropriately. You should assess if adequate procedures and controls are in place to prevent misuse of funds.

Reporting and Recommendations

Your audit reports should be made public and presented to government officials. Reports should highlight any material issues discovered, provide recommendations for improvement and corrective actions. Recommendations may include:

·       Strengthening internal controls and financial procedures

·       Addressing gaps in compliance with laws and regulations

·       Improving transparency and accountability

·       Correcting misstatements in financial reports


It is important that audit recommendations are implemented. As external auditors, you must conduct follow-up audits to verify if issues have been addressed and recommendations adopted. Lack of progress can undermine good governance and public trust in the system.

External scrutiny and audit of public finances by independent auditors is fundamental for transparency, accountability and integrity in government operations. By fulfilling your responsibilities objectively and diligently, you play an important role in promoting good governance and better public financial management in Pakistan.


As a citizen of Pakistan, you have a stake in how public funds are managed and spent. Good governance depends on effective and transparent public financial management to ensure that resources are allocated and utilized properly. By strengthening key pillars like budget formulation, revenue collection, expenditure management, accounting, and auditing, Pakistan can work to eliminate waste and corruption. With the increased availability of data and digital tools, citizens now have more opportunities to provide input and oversight into how their tax money is being spent. By advocating for continued progress in public financial management reform and participating actively in the process, you can help achieve the goal of a prosperous Pakistan with a vibrant economy and high standards of living for all. Collective action can drive change.

About Us

Usman Rasheed & Co Chartered Accountants is a leading financial advisory and audit firm in Pakistan, having offices in Islamabad, Quetta, Lahore, Karachi, Peshawar & Gilgit. The firm is providing Audit, Tax, Corporate, Financial, Business, Legal & Secretarial Advisory services and other related assistance to local and foreign private, public and other organizations working in Pakistan

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